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Share prices surge 3.56 percent

"Taiwan's market liberalization moves should boost its chances to gain full representation in MSCI indexes ...Rising weighting in MSCI indexes will prompt foreign investors to pour funds into Taiwan's stocks."

Simon Chao, President Investment Trust Corp

Stocks posted its biggest advance in almost five months yesterday, paced by exporters such as Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), after the US Federal Reserve said the lowest interest rates in 45 years are helping the world's largest economy.

The TAIEX added 187.03, or 3.6 percent, to 5,442.27. It was the index's biggest gain since March 18. Only 42 of the benchmark's 620 members fell.

Index futures expiring in August rose 3.9 percent to 5,471.

About 5.3 billion shares changed hands, 19 percent above the average trading in the past three months.

The value of trading was NT$133 billion (US$3.9 billion), 36 percent above the three-month daily average.

"Positive comments made by the Fed gave investors a boost in confidence," said Eddie Chiu, who manages the equivalent of US$116 million for First Global Investment Trust Co's (元大投信) Hitech Fund.

"Taiwan's exporters, especially electronic makers, will benefit the most from rising US demand," Chiu said.

TSMC, the world's largest maker of computer chips on a subcontracting basis that counts on the US for three-quarters of its sales, gained NT$2, or 3.5 percent, to NT$59.

Hon Hai Precision Industry Co (鴻海精密), the nation's largest electronics maker, rose NT$8.50, or 6.8 percent, to NT$134.

Stocks also gained as some investors said changes to Morgan Stanley Capital International Inc's indexes may benefit Taiwanese shares following the government's decision to scrap a cap on how much foreign investors can hold.

"Taiwan's market liberalization moves should boost its chances to gain full representation in MSCI indexes," said Simon Chao (趙永宏), who helps manage US$2.8 billion at President Investment Trust Corp (統一投信).

"Rising weighting in MSCI indexes will prompt foreign investors to pour funds into Taiwan's stocks," he said.

As much as US$6 billion could flow into Taiwan, where the TAIEX is up 22 percent this year, after the change, according to a UBS Warburg report.

Chunghwa Telecom Co (中華 電信) may be among the beneficiaries after the government's success in selling a stake in Chunghwa to overseas investors last month, a Chinese-language newspaper reported. Chunghwa gained NT$0.70, or 1.5 percent, to NT$48.30.

Chunghwa Telecom on June 17 said it may buy back and cancel as much as 10 percent of its shares, valued by the market at NT$45.9 billion to help lift earnings per share and make the company's shares more attractive to overseas investors.

China Steel Corp (中鋼) gained NT$1, or 4 percent, to NT$26.30 after it hired Citigroup Inc and UBS AG to sell a NT$24.7 billion government stake in it.

The government will sell 970 million shares, or about 10 percent of China Steel, by September, the steelmaker said in a statement.

Winbond Electronics Corp (華邦電子) gained NT$0.90, or 4.6 percent, to NT$20.30 after it said it will spend as much as NT$210 million to buy back as many as 10 million shares.
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